There's a lot of pretty dumb people around then. Most annalists and all governments including the IEA have been saying prices will fall since the initial jump four years ago.[TW]Fox;11698580 said:Takes real skill to say 'Oil will rise' and get it right
petrol prices
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You mention this a lot as speculation as being the cause of the high price. I'm not an economist but this doesn't seem like something you can discount as being something separate from the price.
As a commodity in limited quantity it seems inevitable at some point even before demand exceeds supply that the market will realise that that point exists, and hence the value of it will rapidly climb. Of course its a good place for your investment capital, because from what I have read it seems unlikely that a vast amount of supply is going to come on stream to supply the extra 20m barrels a day we'll need in the next 15 years.
I mean what's the solution to speculation driving the price? Stop people investing in it? Then how do you set the price? That doesn't sounds like healthy capitalism to me.
As a commodity in limited quantity it seems inevitable at some point even before demand exceeds supply that the market will realise that that point exists, and hence the value of it will rapidly climb. Of course its a good place for your investment capital, because from what I have read it seems unlikely that a vast amount of supply is going to come on stream to supply the extra 20m barrels a day we'll need in the next 15 years.
I mean what's the solution to speculation driving the price? Stop people investing in it? Then how do you set the price? That doesn't sounds like healthy capitalism to me.
By its very nature it is an “in demand” commodity and therefore a safe place in which to invest money when other such places have become less safe of late. Because of this the chaps in the city are putting their pennies into it and so we have an ever increasing price as production is gobbled up and therefore new product attracts an ever increasing price as people try to get on board.
I simplify the detail but that in essence is why we are all paying so much for it right now.
I simplify the detail but that in essence is why we are all paying so much for it right now.
Could you unsimplify it a bit for the rest of us? How does "the chaps in the city are putting their pennies into it" work? How is production gobbled up?
Soldato
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Most interesting part was:
But so far, oil cartel Opec, of which Saudi Arabia is a key member, has refused to increase production, insisting that the price rises have been driven by speculators and not real demand problems.
Capitalism at its best.
Increase the minimum quantity for oil traded on NYMEX.
Soldato
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Can anyone explain why the gap in price between diesel and petrol is getting wider?
Chaps in the city = Financial traders
Production gobbled up = Bought by said traders on the markets
They are putting money into oil on the world markets as they can feel secure that the demand will always be there and therefore their investment is not going to devalue overnight. Oil as a commodity is traded, just like gold, and its value is very high right now so the oil companies have to pay more for it, as in turn do we.
Clear?
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I'd have guessed more demand for diesel as more people buy diesel cars?
Soldato
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Have we reached a point where there are more diesel cars on UK roads than petrol cars?
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I doubt that at the moment but soon, however what costs more to refine or what do you gain more of from a barrel of oil?
Anyone know?
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I've always thought that petrol was the more expensive of the two fuels to produce. Can anyone confirm or deny this?
We've just come out of winter so refineries are now switch back to producing diesel instead of heating oil, with diesel being the new 'in' thing supply and demand comes into play with diesel being a by-product of petrol, it's also taxed more, as it's a heavy polluter
rolleyes
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We've just come out of winter so refineries are now switch back to producing diesel instead of heating oil, with diesel being the new 'in' thing supply and demand comes into play with diesel being a by-product of petrol, it's also taxed more, as it's a heavy polluter
Yeah but the tax is a fixed amount isn't it? So in that respect the widening of the gap between petrol and diesel isn't anything to do with the Govt. (for a change)
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Diesel is cheaper to make
I've always been lead to believe this, mainly as it's "less refined" than petrol.
"Come in Simon, where is your input?"
Something to do with Low Sulphur, which Diesel fails at? I'll see if I can dig up something more specific.
Aye it's more Crude then refined, hence the black smoke out of old cars